Friday, May 13, 2016

Monetary Policy Committee (MPC)

The process to constitute a Monetary Policy Committee (MPC) will begin once the Finance Bill 2016 has been notified as an Act, Economic Affairs Secretary Shaktikanta Das said.
“Process to constitute Monetary Policy Committee will be initiated after passage of Finance Bill and its notification as an Act,” Mr Das tweeted.
In his Budget speech, Finance Minister Arun Jaitley had said that the Reserve Bank of India Act would be amended to facilitate the setting up of a committee tasked with setting interest rates in the economy.
The proposed committee will have six members — three appointed by the Reserve Bank of India (RBI) and the remaining nominated by an external selection committee.
Following the setting up of this MPC, each member will have a vote while the Reserve Bank of India governor will have a deciding vote in the event of a tie, therefore rendering him as first among equals. This is important in the context of the government pushing for lower interest rates to spur the sluggish demand in the economy.

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